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Note 10 - Equity Compensation | 6 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 10 - EQUITY COMPENSATION Stock Based Compensation The Company ’s equity compensation plan, the 2012 Stock Incentive Plan (“the 2012 Plan”), was approved by shareholders in November 2012. The 2012 Plan covers all of its full-time employees, outside directors and certain advisors and replaced all previous equity compensation plans. In November 2016, the Company’s shareholders approved an amendment to the 2012 Plan that added 1,600,000 shares to the plan and implemented the use of a fungible share ratio that consumes 2.5 available shares for every 1 full value share awarded by the Company as stock compensation. The 2012 Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, and other stock awards. Stock option grants or stock awards made pursuant to the 2012 Plan are granted at fair market value at the date of option grant or stock award. Stock option grants may be service-based or performance-based. Service-based options granted during fiscal 2017 and prior fiscal years generally have a four year ratable vesting period beginning one year after the date of grant. Service-based options granted during fiscal 2018 have a three year ratable vesting period beginning one year after the date of grant. Performance-based options have a three year ratable vesting period beginning one year after the date of grant. The maximum exercise period of stock options granted under the 2012 Plan is ten years. If a stock option holder’s employment with the Company terminates by reason of death, disability or retirement, as defined in the Plan, the Plan generally provides for acceleration of vesting. The number of shares reserved for issuance under the 2012 Plan is 1,453,356 shares, all of which were available for future grant or award as of December 31, 2017. Service-based and performance-based stock options were granted and restricted stock units (“RSUs”) were awarded during the six months ended December 31, 2017. As of December 31, 2017, a total of 3,448,677 stock options were outstanding under the 2012 Plan (as well as one previous stock option plan which was also approved by shareholders), of which, a total of 1,527,651 stock options were vested and exercisable. As of December 31, 2017, the approximate unvested stock option expense that will be recorded as expense in future periods is $2,563,987. The weighted average time over which this expense will be recorded is approximately 24 months. Additionally, as of December 31, 2017, a total of 187,150 RSUs were outstanding. The approximate unvested stock compensation expense that will be recorded as expense in future periods for the RSUs is $775,144. The weighted average time over which this expense will be recorded is approximately 30 months. Stock Options The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. The below listed weighted average assumptions were used for grants in the periods indicated.
|  | Three Months Ended |  |  | Six Months Ended |
|  | December 31 |  |  | December 31 |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Dividend yield |  |  | 3.06 | % |  |  | 2.07 | % |  |  | 3.35 | % |  |  | 1.81 | %
Expected volatility |  |  | 41 | % |  |  | 41 | % |  |  | 41 | % |  |  | 43 | %
Risk-free interest rate |  |  | 1.94 | % |  |  | 2.06 | % |  |  | 1.77 | % |  |  | 1.00 | %
Expected life (in years) |  | 6.0 |  |  | 6.0 |  |  | 6.0 |  |  | 6.0 |
At December 31, 2017 , the 794,537 options granted during the first six months of fiscal 2018 to employees had exercise prices ranging from $5.92 to $6.54 per share, fair values ranging from of $1.71 to $1.96 per share, and remaining contractual lives of between 9.5 and 10 years. At December 31, 2016, the 834,320 options granted during the first six months of fiscal 2017 to employees had exercise prices ranging from $9.65 to $11.06 per share, fair values ranging from of $3.29 to $3.83 per share, and remaining contractual lives of between 9.5 and 10 years. The Company calculates stock option expense using the Black-Scholes model. Stock option expense is recorded on a straight line basis, or sooner if the grantee is retirement eligible as defined in the 2012 Stock Incentive Plan, with an estimated 8.54% forfeiture rate effective October 1, 2017. Previous estimated forfeiture rates were between 2.0% and 8.3% between the periods January 1, 2013 through September 30, 2017. The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants. The risk-free interest rate is the rate of a five year Treasury security at constant, fixed maturity on the approximate date of the stock option grant. The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised. It is the Company’s policy that when stock options are exercised, new common shares shall be issued. The Company recorded $367,920 of expense in the three months ended December 31, 2017 and recorded a reduction of expense of $142,434 in the three months ended December 31, 2016, related to stock options. The reduction of stock option expense in the three months ended December 31, 2016 was the result of expectations that the performance criteria related to incentive based options will not be met. The Company recorded $1,125,728 and $1,296,009 of expense related to stock options in the six months ended December 31, 2017 and 2016, respectively. As of December 31, 2017, the Company had 3,344,138 stock options that were vested and that were expected to vest, with a weighted average exercise price of $8.13 per share, an aggregate intrinsic value of $905,309 and weighted average remaining contractual terms of 7.4 years. Information related to all stock options for the si x months ended December 31, 2017 and 2016 is shown in the following tables:
|  | Si x Months Ended December 31, 2017 |
|  |  |  |  |  | Weighted |  |  | Weighted |  |  |  |  |
|  |  |  |  |  | Average |  |  | Average |  |  | Aggregate |
|  |  |  |  |  | Exercise |  |  | Remaining |  |  | Intrinsic |
|  | Shares |  |  | Price |  |  | Contractual Term (in years) |  |  | Value |
Outstanding at 6/30/17 |  |  | 3,119,688 |  |  | $ | 9.12 |  |  |  | 7.4 |  |  | $ | 2,332,224 |
Granted |  |  | 794,537 |  |  | $ | 5.98 |  |  |  |  |  |  |  |  |
Forfeitures |  |  | (438,609 | ) |  | $ | 11.62 |  |  |  |  |  |  |  |  |
Exercised |  |  | (26,939 | ) |  | $ | 6.49 |  |  |  |  |  |  |  |  |
Outstanding at 12/31/17 |  |  | 3,448,677 |  |  | $ | 8.10 |  |  |  | 7.4 |  |  | $ | 971,344 |
Exercisable at 12/31/17 |  |  | 1,527,651 |  |  | $ | 8.14 |  |  |  | 5.7 |  |  | $ | 218,246 |
|  | Si x Months Ended December 31, 2016 |
|  |  |  |  |  | Weighted |  |  | Weighted |  |  |  |  |
|  |  |  |  |  | Average |  |  | Average |  |  | Aggregate |
|  |  |  |  |  | Exercise |  |  | Remaining |  |  | Intrinsic |
|  | Shares |  |  | Price |  |  | Contractual Term (in years) |  |  | Value |
Outstanding at 6/30/16 |  |  | 2,976,490 |  |  | $ | 8.97 |  |  |  | 6.6 |  |  | $ | 8,338,974 |
Granted |  |  | 834,320 |  |  | $ | 11.05 |  |  |  |  |  |  |  |  |
Forfeitures |  |  | (147,375 | ) |  | $ | 16.03 |  |  |  |  |  |  |  |  |
Exercised |  |  | (38,063 | ) |  | $ | 7.75 |  |  |  |  |  |  |  |  |
Outstanding at 12/31/16 |  |  | 3,625,372 |  |  | $ | 9.18 |  |  |  | 7.1 |  |  | $ | 4,648,729 |
Exercisable at 12/31/16 |  |  | 1,700,025 |  |  | $ | 8.73 |  |  |  | 5.1 |  |  | $ | 3,216,899 |
The following table presents information related to unvested stock options:
|  | Shares |  |  | Weighted-Average Grant Date Fair Value |
Unvested at June 30, 2017 |  |  | 1,842,127 |  |  | $ | 3.52 |
Granted |  |  | 794,537 |  |  | $ | 1.73 |
Vested |  |  | (513,504 | ) |  | $ | 3.49 |
Forfeited |  |  | (202,134 | ) |  | $ | 3.46 |
Unvested at December 31, 2017 |  |  | 1,921,026 |  |  | $ | 2.79 |
The weighted average grant date fair value of options granted during the six month periods ended December 31, 2017 and 2016 was $1.73 and $3.83, respectively. The aggregate intrinsic value of options exercised during the six months ended December 31, 2017 and 2016 was $22,079 and $99,883, respectively. The aggregate grant date fair value of options that vested during the six months ended December 31, 2017 and 2016 was $1,793,086 and $1,779,490, respectively. The Company received $174,965 and $295,030 of cash from employees who exercised options in the six month periods ended December 31, 2017 and 2016, respectively. In the first six months of fiscal 2018 the Company recorded a $83,608 reduction of the federal income tax payable, $559,474 as an increase in common stock, $87,354 as a reduction of income tax expense, and $170,462 as a reduction of the deferred tax assets. In the first six months of fiscal 2017 the Company recorded $95,443 as a reduction of federal income taxes payable, $124,056 as a decrease in common stock, $22,073 as a reduction of income tax expense, and $197,427 as a reduction of the deferred tax asset related to the issuance of RSUs and the exercises of stock options in which the employees sold the common shares prior to the passage of twelve months from the date of exercise. Restricted Stock Units A total of 91,490 RSUs with a fair value of $5.92 per share were awarded to employees during the six months ended December 31, 2017. The service-based RSUs awarded during fiscal 2018 have a three year ratable vesting period beginning one year after the date of award. A total of 71,700 RSUs with a fair value of $11.06 per share were awarded to employees during the six months ended December 31, 2016. The service-based RSUs awarded during fiscal 2017 and in prior fiscal years have a four year ratable vesting period beginning one year after the date of award. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the RSUs were awarded. The RSUs have a four year ratable vesting period. The RSUs are non-voting, but accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock. Dividends on RSUs in the amount of $38,463 and $19,826 were accrued as of December 31, 2017 and 2016, respectively. Accrued dividends are paid to the holder upon vesting of the RSUs and issuance of shares. The following table presents information r elated to RSUs:
|  | Shares |  |  | Weighted-Average Grant Date Fair Value |
Unvested at June 30, 2017 |  |  | 133,335 |  |  | $ | 10.38 |
Awarded |  |  | 91,490 |  |  | $ | 5.92 |
Shares Issued |  |  | (30,675 | ) |  | $ | 10.30 |
Shares Forfeited |  |  | (7,000 | ) |  | $ | 10.46 |
Unvested at December 31, 2017 |  |  | 187,150 |  |  | $ | 8.21 |
As of December 31, 2017 , the 187,150 RSUs had a remaining contractual life of between 2.5 and 3.5 years. Of the 187,150 RSUs outstanding as of December 31, 2017, 176,073 RSUs are vested or expected to vest in the future. An estimated forfeiture rate of 8.5% was used in the calculation of expense related to the RSUs. The Company recorded $81,895 and $337,310 of expense related to RSUs in the three and six month periods ended December 31, 2017, respectively. As of December 31, 2016, th e 118,575 RSUs had a remaining contractual life of between 2.5 and 3.5 years. Of the 118,575 RSUs outstanding as of December 31, 2016, 114,531 RSUs are vested or expected to vest in the future. An estimated forfeiture rate of 3.4% was used in the calculation of expense related to the RSUs. The Company recorded $89,896 and $392,197 of expense related to RSUs in the three and six month periods ended December 31, 2016, respectively. Director and Employee Stock Compensation Awards The Company awarded a total of 19,920 and 21,199 common shares in the six months ended December 31, 2017 and 2016, respectively, as stock compensation awards. These common shares were valued at their approximate $155,974 and $228,000 fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, respectively, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock and for employees who received a nominal recognition award in the form of Company stock. Stock compensation awards are made in the form of newly issued common shares of the Company. Deferred Compensation Plan The Company has a non-qualified deferred compensation plan providing for both Company contributions and participant deferrals of compensation. This plan is fully funded in a Rabbi Trust. All plan investments are in common shares of the Company. As of December 31, 2017 there were 38 participants, all with fully vested account balances. A total of 245,732 common shares with a cost of $2,187,811, and 257,898 common shares with a cost of $2,456,875 were held in the plan as of December 31, 2017 and June 30, 2017, respectively, and, accordingly, have been recorded as treasury shares. The change in the number of shares held by this plan is the net result of share purchases and sales on the open stock market for compensation deferred into the plan; shares newly issued for compensation deferred into the plan, and for distributions to terminated employees. The Company issued 42,280 new common shares for purposes of the non-qualified deferred compensation plan as of December 31, 2017 and the company did not issue new common shares for plan in fiscal 2017. The Company used approximately $106,537 and $390,288 to purchase 15,225 and 39,487 common shares of the Company in the open stock market during the six months ended December 31, 2017 and 2016, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. The Company ’s non-qualified deferred compensation is no longer funded by purchases in the open market of LSI stock as of September 30, 2017. This plan is now solely funded by newly issued shares that are authorized from the Company’s 2012 Stock Incentive Plan.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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